Westpac has announced a reduction in its fixed home loan rates for longer-term loans, effective tomorrow, marking a shift in the lending landscape as wholesale funding costs decrease. The bank's two-year term rate is now at 6.99%, with the three-year rate reduced to 6.75%, the four-year down to 6.69%, and the five-year at 6.49%. Meanwhile, Westpac has increased its short-term fixed rates for six months and one year to 7.39% and also boosted its one-year term deposit rate by 10 basis points due to strong competition for deposits.
This move comes as Kiwibank earlier this week raised its short-term rates, with a six-month special at 7.39% and a one-year fixed special rising by 10 basis points to 7.35%. The changes in rates reflect the broader trend in New Zealand's financial markets, where plummeting wholesale interest rates have hinted at potential mortgage rate deductions soon. Kiwibank has even predicted that mortgage rates might drop by 50-150 basis points within a year.
Looking ahead, the Reserve Bank of New Zealand's Monetary Policy Statement next Wednesday is expected to signal the end of New Zealand’s swift interest rate hike cycle. Over less than two years, the Official Cash Rate (OCR) has surged from a record low of 0.25% to 5.5%.
In recent weeks following a rate hike four weeks ago, Westpac's latest move reflects minimal activity in home loan rate alterations across the banking sector. Customers are urged to negotiate or consult brokers—albeit with caution due to brokers' limited panels. Resources such as break fee calculators and mortgage renewal advice have been highlighted for borrowers navigating the rising market.
As competition among banks heats up, The Red Bank has extended its term deposit offer of 6.10% to one year, while BNZ is set to end its superior one-year offer at 6.25% by the end of this week.
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